All categories

3 years ago

Shoe-leather costs arise when higher inflation rates induce people to __________.

Business

1 answer:

S_A_V [24]3 years ago

3 0

Answer:

D - Hold less money

Explanation:

Inflation is the persistent increase in the general prices of goods and services over a period of time.

During inflation period, nobody wants to hold more of cash because the value of money gets depreciated as inflation increases (prices of goods increase).

For example, shoe-leather costs increases when there is an increase in inflation and it makes more economic sense to purchase shoe-leather as it preserves the value of money.

You might be interested in

Gilberto Company currently manufactures 84,000 units per year of one of its crucial parts. Variable costs are $2.90 per unit, fi

RoseWind [281]

Answer:

Cost to make $337,600

Cost to make $344,400

The company should make the product

Explanation:

Calculation to determine the total incremental cost of making 84,000 and buying 84,000 units

COST TO MAKE

Relevant per unit Relevant fixed cost Total relevant cost

Variable cost per unit $2.90 - $243,600(84000*$2.90)

Fixed manufacturing costs - $94,000 $94,000

Cost to make $337,600

($243,600+$94,000)

COST TO BUY

Relevant per unit Relevant fixed cost Total relevant cost

purchase per unit $4.10 - $344,400[$4.10*84000]

Cost to make $344,400

Based on the above calculation the cost of buying is higher than the cost of making therefore the company should MAKE the product.

5 0

3 years ago

Foulds Company makes 12,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part

Kazeer [188]

Answer:

a) Unit product cost relevant for decision = $41.60

b) Net dollar advantage = $49,200

c) Maximum per unit cost willing to pay = $46.60

Explanation:

As per the data given in the question,

Particulars Amount

Direct materials $13.20

Direct labor $20.20

Variable manufacturing overhead $3.20

Fixed manufacturing cost $5.00 ($10.20-$5.20)

Unit product cost $41.60 ($46.80-$5.20)

Unit product cost relevant for decision = $41.60

Relevant unit product cost = $41.60

Supplier offered selling price = $42.50

Additional contribution margin per year = $60,000

Production in year = 12,000 units

Net dollar advantage = ($41.60-$42.50) × 12,000 + $60,000

= $49,200

Maximum per unit cost willing to pay = $42.50 + $49,200 ÷ 12,000

= $46.60

7 0

4 years ago

assume that your publicly traded company attempts to be completely transparent about its financial condition, and provides thoro

snow_tiger [21]

Answer:

A company's stock price is defined by the demand the market has over it, by the analyst researching it and their forecast of growth, as well as the performance of the company at generating income.

Explanation:

The P/E ratio or price over earnings ratio is the ratio that explains the price of a stock. We take the price of the stock and then divide it by the earnings per share obtained by quarter and then by year when the fiscal year is over. It is influenced by the demand of the stock in the markets, by the projection analyst may have after researching the company and by the income, the company generates. Today there is an overvaluation of the stocks in all the markets. However by following the advice of W. Buffett and Peter Lynch, as well as Soros we can find undervalued stocks.

8 0

3 years ago

The Retained Earnings account had a beginning credit balance of $26,000. During the period, the business had a net loss $12,000,

hodyreva [135]

Answer:

$6,000

Explanation:

Data provided

Beginning credit balance = $26,000

Net loss = $12,000

Paid dividends = $8,000

The calculation of Retained Earnings account is given below:-

Retained Earnings = Beginning balance - Net loss - Dividend

= $26,000 - $12,000 - $8,000

= $26,000 - $20,000

= $6,000

So, for computing the retained earning we simply applied the above formula.

5 0

4 years ago

Currently, you make one of the components needed for final assembly of your product and you are considering buying the part from

VashaNatasha [74]

Answer:

1. Break even quantity is 18,125 units

2. Cost to make 28,000 units = $ 775,000

3. Total costs to buy 28,000 units = $ 696,000

4. Savings by using low cost option ( buy from outside) $ 79,000

Explanation:

Computation of Break even point

Variable cost to make equipment in house $ 25 per unit

Cost to purchase the unit from outside $ 17 per unit

Differential Cost per unit $ 8 per unit

Fixed costs to be paid to outside supplier $ 220,000

Fixed costs to be incurred in house $ 75,000

Incremental fixed costs $ 145,000

Break even point - Differential in fixed costs / Differential cost per unit

$ 145,000/ $ 8 = 18,125 units

Computation of costs to make 28,000 units

Variable costs per unit - $ 25 per unit

Units to be produced - 28,000 units

Total Variable costs $ 25 * 28,000 units $ 700,000

Fixed costs $ 75,000

Total costs to make 28,000 units $ 775,000

Computation of costs to buy 28,000 units

Variable costs per unit - $ 17 per unit

Units to be produced - 28,000 units

Total Variable costs $ 17 * 28,000 units $ 476,000

Fixed costs $ 220,000

Total costs to make 28,000 units $ 696,000

Computation of savings

Buying 28,000 units $ 775,000

Making 28,000 units $ 696,000

Savings from buying from outside $ 79,000

6 0

3 years ago